Medicaid Due for an Overhaul

Tim Huelskamp, Ph.D., began his service as president of The Heartland Institute in July 2017. He will succeed Heartland’s cofounder and long-time president Joseph Bast, who will remain at Heartland as CEO.

From 2011 to 2017, Dr. Huelskamp served three terms in Congress representing the 1st District in Kansas. He advocated on behalf of conservative, free-market solutions in a wide range of policy arenas and served on numerous committees, most notably the Veterans Affairs Committee and Budget Committee. On the Veterans Affairs Committee, he was a leader in exposing the corruption and failures at the VA and pushing through a historic health care choice option for veterans.

For years, doctors, patients and lawmakers have rightly complained federal rules and regulations make it all but impossible for states to reform and innovate Medicaid. However, Seema Verma, the chief administrator of the Centers for Medicare and Medicaid Services, promised a “new era” of flexibility and accountability for the program. By expanding access to one of Medicaid’s flexibility provisions known as Section 1115 waivers, the Trump administration is offering a bold option for states that want to improve health care for their poor and disabled citizens.

It’s no secret Medicaid is due for an overhaul. Since its inception in 1965, the program’s costs have ballooned to out-of-control levels. Today, Medicaid consumes nearly one-third of all state budgets. Yet despite its exploding costs, Medicaid enrollees suffer worse health outcomes than most Americans, including many uninsured.

Verma introduced a number of changes to the 1115 waiver process states can use to break Medicaid’s vicious cycle of increasing costs and declining quality of care. First, CMS promises to remove unnecessary and duplicative requirements that don’t directly contribute to the program’s goals. Second, the agency pledges to expedite approval for waivers that replicate successful reforms already implemented elsewhere. Third, CMS plans to increase the trial period of waivers from five to 10 years, to allow long-term reforms to take effect.

The Trump administration also committed to work with states looking to move able-bodied adults off Medicaid rolls and refocus the program toward serving the needs of the most vulnerable. Under Obamacare, states were offered preferential funding to expand Medicaid to millions of able-bodied adults, many of whom already enjoyed reliable access to private health insurance. As a result, states diverted funding from nearly 600,000 disabled individuals with mental illnesses, developmental disabilities and traumatic brain injuries in need of critical services. For example, after Arkansas expanded Medicaid to 300,000 additional non-disabled adults, their waiting list for disabled patient services grew by 25 percent, 79 of whom died waiting for care.

Verma suggested a number of options states can make to return Medicaid to its core mission of treating vulnerable patients. States will be able impose modest cost-sharing requirements on able-bodied enrollees to encourage them to seek lower-cost providers. They may also enroll patients in a health savings account, which incentivizes users to spend less on health care services. And most notably, the administration will allow states to impose work requirements on Medicaid’s non-disabled adult population.

These work provisions have consistently proven to be an effective method for lifting able-bodied individuals out of poverty and refocusing taxpayer money on those unable to work. After Kansas required recipients of Temporary Assistance for Needy Families to work at least 20 hours per week, 30 percent of enrollees returned to work and saw their incomes increase 104 percent after one year. And after four years, 71 percent reentered the labor force and increased their incomes by 247 percent.

Thanks to the Trump administration, state policymakers finally have the chance to work alongside CMS and deliver better, more innovative and more compassionate health care to the less fortunate, and at a price taxpayers can afford.